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Securities Lending Market Report | December 2023

Exploring SFTR Data

>>> Pledge Collateral
Introduction

In the last report I drew a comparisson between SFTR and a semi-dormant volcano, due to its size and ability to Fig 9 - Publicly Available Data from Trade Repositories
influence at a tectonic level. Over the past months that analogy has continue to resonate on two fronts, first as
firms address challenges related to back-dated reporting and second, the SFTR refit has appeared on our horizon.
Percentage of Collateral Reported as Pledge (EU vs UK)
Historical reporting is an ongoing challenge, not least because the regulation doesn’t make it particularly easy to
submit retrospective data. Over recent weeks the nuance of this activity have been the primary focus of ISLA, 20.00%
resulting in a re-write of the related SFTR Best Practices. A good indication of its complexity is the resulting practice
has required over 2,500 words and several meetings to complete. That practice can be found on the ISLA Best 18.00%
Practice Handbook and, if there are further questions, please do reach out to us at regtech@islaemea.org. 16.00%
14.00%
The second point I mentioned above is the appearance on the horizon of the SFTR Refit. At the moment, exact
dates or approach aren’t clear, but can be found on the European Commission’s website in relation to their report 12.00%
to parliament on the macroprudential review for credit institutions. Text in the report notes that “In 2024, the 10.00%
Commission will also consult on the review of the Securities Financing Transaction Regulation (SFTR)”. The full 8.00%
report can be found here. 6.00%
Work on this topic will continue in the newly named ISLA ‘Regulatory Reporting’ working group. The name of this Jan 23 Feb 23 Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23
working group changed quite recently to broaden its scope from solely SFTR to the wider spectrum of regulatory
reporting, including the upcoming US Securities and Exchange Commission (SEC) 10c-1a reporting obligations. EU UK
In the following pages we will explore the publicly available trade repository data and, as in previous editions of this
report, please be mindful that the available data may not contain the full story. During the first half of the year the use of security interest While EU reported activity experienced more stable
arrangements had shown stable growth, which lead to a growth. From December 2022 to December 2023,
moderate uptick through Q3 2023 and a notable spike in the level of this type of activity rose from 16.48% to
Q4 2023, regarding UK reportable transactions. As a result, 17.15%.
from December 2022 to December 2023, the level of this
type of activity rose signifcantly from 16.14% to 18.99%.